Navigating Real Estate Professional Rules

Even if you work full time in the real estate field, you may not be considered a real estate professional in the eyes of the IRS. This means you may not be entitled to all pass-through losses and deductions of your real estate activities. There are threshold tests to qualify as a “real estate professional” under Internal Revenue Code (IRC) Sec. 469(c)(7), one of which requires material participation. Achieving the hour minimums can be aided by grouping real estate rentals activities together. In 2011, the IRS issued a one-time relief allowing individuals to elect to group their rental real estate activities retroactively.